The following was received by many people in the Brinker Storage field with the old dual purpose (storage & production leases)--
 
Dear Non-Litigating Brinker Field Landowners:

Hilcorp is increasing their royalty offer to 15% for OIL & GAS. This is most likely a GROSS Royalty because that's what was discussed. This is a significant increase from where we started. Again, many folks in Pennsylvania and West Virginia with similar leases to ours ended up with only 12.5% royalties (sometimes NET) when the oil and gas production privileges were farmed out. In a perfect world we would not have to go through Columbia Gas. At the same time neither would Hilcorp. Hilcorp continues to indicate they truly desire to develop the oil and gas resources. Hilcorp has been very gentlemen-like in their approach to the situation. The 15% royalty means you could be handsomely compensated for your resources, even though there is a dual interest in the Oil and Gas (Columbia Gas).
 
There are many online oil and gas calculators that can help you figure out your possible royalty income at 15%. Look up the production results from nearby counties (ie, Carroll) as potential example.
 
Columbia Gas’ arrangement with Hilcorp stipulates Columbia will have a 5% working interest plus a .7% overriding royalty in the wells. This arrangement along with our offered 15% royalty means Hilcorp’s overall payout will be right close to 20%. The business economic model that drillers strive to maintain is a 79 to 80% margin for themselves, after all they are doing all the work. This Hillcorp offer allows them to maximize their royalty offer while still staying within operator industry standards.

Again, Last Friday we met with Hilcorp’s Mr. Smith at Roth Blair’s law office. During our three hour discussion, Hilcorp offered to modify their Lease Amendment offer. The other possible changes they proposed in addition to those mentioned at the 9/12 & 9/13 open house include:
* adding well shut-in payments
* adding many additional landowner friendly provisions.
* a hold harmless and indemnification clause.
* they have indicated the soon to be finished draft is 16 pages long.
* According to Hilcorp, the changes would make the Lease Amendments binding upon the old manufacturers lease.
* Hilcorp stated they are willing to offer the Lease Amendment to all affected people Not In A Lawsuit Against Nisource/Columbia, so please make your decisions wisely. If you have sued Columbia & NiSource, Hilcorp cannot talk to you, and they will not make this offer to you.
*Hilcorp stated their Intention to Make the Offer to All Non-Litigants and They Will Not “Cherry Pick” Parcels.

It goes without saying- the best way to maximize drilling potential from one company is to combine inviting acreage.

Lease language is often not easy to understand. The Roth Blair law firm will have had the opportunity to review Hilcorp's Lease Amendment. Lawyers will be available to go over Hilcorp’s offer with interested parties when the Lease Amendment is prepared. This could be done in seminar format so folks can hear each other’s questions, and receive an answer. We recommend that you discuss any Lease Amendment with an experienced oil and gas attorney before you sign it.

We expect to have more news and additional details to disclose very soon. Please share this very important information with your neighbors.

Views: 5200

Replies to This Discussion

Jschurm,

there are no group leaders.  Just a hard working core of NOT COMPENSATED community organizers, who have spent hundreds of hours bringing the issue to light, and who have now worked with Hilcorp to improve their offer.  Hilcorp is taking a higher road in comparison to other companies, and deserve praise for such.

Chesapeake was sued by West Virginians in 2005 or 2007 for paying people  100 or 200 dollar annual flat gas royalty eventhough WVA had a min royalty law of 12.5%.  Evidence shows they did the same in Kentucky where they were sued for flat rating people in 2009.

I guess some companies work hard to enforce the provisions of those old leases and others work with you to make amicable improvements. 

Considering the alternative, I am glad Colmbia/NiSource partnered with Hilcorp.

What leverage do you have if Hilcorp is strictly doing this because they are amicable? 

You have something that they want/need. The ratification of a lease that is not structured for the way they want to drill this area.  The only reason that they are probably sitting down and making an offer (settlement) is because the lawsuit that you are warning people against shed that light you spent "hundreds of hours" to copy. I would be very surprised if they don't just pick off what they can at 15% and then make a real settlement for those who are sticking to their guns and continuing with the lawsuit. 

I really hope this works out for you all and that I am wrong, just think that you have an opportunity to rectify something rather than ratify it. 

EMBRACING the old lease??  Sounds like they are willing to improve the old lease for a brave new world.

 

In essence by signing an AMENDMENT, you are agreeing to the terms in the old lease, unless they are specifically addressed in the amendment.   No one has seen the amendments as of yet and I am confident there are significant improvements.  But I am also sure by Hilcorps' own people, the one thing that will not change is the claim Columbia makes to hold the lease by storage.   The landowners are in this situation for exactly that reason and if we don't rectify it now, it will raise it's head again. 

"Claim Columbia makes to hold the lease by storage"  Is Columbia Gas is operating a pretend storage field?

Doesn't matter, the ability to hold all the production rights by claiming storage while not abiding by the rest of the conditions of the lease is in question. Not to mention the issue of Columbia being the sole determinant as to if the are storing gas.

IA, 

If you look at the ODNR list of companies that have a permit to drill in Ohio, you won't find Hilcorp. 

Do you know what happens when you sign a lease with a middle man company, similar to DPS Penn?  They take the difference betwen what you are paid and what the oil & gas companies are willing to pay. You will be sharing your Bonus with Hilcorp.

Let us know how they treat you after you sign up.  

Ron,

" ... you won't find Hilcorp ..."

 

1st well permit for Hilcorp in Columbiana County  ...

 

Date Issued: Aug 13, 2012

Permit # 34-029-21745-0000

Well Name: HANOVER-MOUNTZ 1

HILCORP ENERGY COMPANY

1201 LOUISIANA STREET

SUITE 1400

HOUSTON, TX 77002

(713) 209-2400
 

Thanks helping to set the record straight .  You are the "Secretary of Wells" :) I remember a few weeks ago when you posted the Hilcorp well info in Hanover Township.   I beleive their horizontal permit was for something like an 8,000 foot horizontal.

Hilcorp does seem to be a stand up producer.  They are privately owned with one stockholder so you will not find the amount of data on them you find on the other producers.   The issue here.... NOT Hilcorp.   In fact I would venture so far the storage field land owners have had more interaction with the powers that be in Hilcorp than any landowner has had with any producer.   That alone tells you how tenuous this situation is.   Columbia/Nisource have blown their chances to finesse the situation multiple times.   It appears they are counting on Hilcorp to attempt to pick up the ball they have dropped.   They are trying but it might be a bigger job than they anticipated.  

jshurm,

Hilcorp's offer is not a settlement.  It's an offer.  There are obvious positives and negatives to being in or out of a lawsuit.  It's not about warning people against suing, however It is important that poeple understand all of those risk factors, which should be best left up to their attorneys to describe.  For example, the proposed offer is apparently not available to the litigators.  People need to carefully consider all their options.

Nobody besides Hilcorp, NiSource, or Columbia know what their endgame legal strategy  is.

IA,

 " ... For example, the proposed offer is apparently not available to the litigators ..."

 

 Is Hilcorp's offer available to any litigator if they agree to drop out of the law suit ?

 

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service